What is the difference between a second mortgage and a refinance?

I am financing a pool and was told by the lender that a refinance and a second mortgage are the same thing. Is that correct?

Public Comments

1. No. A refinance gives you a new mortgage with a lower interest rate. A second mortgage is a mortgage taken out on property that already has one mortgage, with priority in settlement of claims given to the earlier mortgage. In other words, you have two mortgages.
2. A second mortgage would be a loan in addition to your primary mortgage where your home is the collateral for the loan. A home equity loan could be described as a second mortgage. A refinance would be getting a new mortgage with new terms. When you refinance, you pay off your prior mortgage and start with a new one.
3. The LENDER told you that??? You refi your current mortage (usually to a lower oercent and remove some equity to pay for your pool), but you can open a new, seperate SECONDARY mortage to pay for your pool too.
4. Pretty much: yes. Differences lie (no pun intended) in the intrest percentage charged. And there may be options from the lender to "sell" your mortgage/refinance case to another bank, who then can RAISE the intrest owed. Check the fine print and ask a trusted investment attorney for laymen's explanation of any such deals; laws vary from state to state. In the end, they both meet one end if you default on the deal: you lose your house.